Do I need to worry about my bank account?

[Lisa68]

We are preparing to file Ch 13. We have a LOC with our bank (Wachovia) -- about $6000.00. Our lawyer said they can't freeze our account or anything, but from what I've read, many people open new bank accounts in anticipation of a bk. Should we be concerned?

[keepinitreal]

If you're going to miss a couple of payments on your line of credit with Wachovia before you file Chapter 13, they'll probably use their right of offset to withdraw your money from any checking or savings accounts you have with them.

[momofthree]

Ditto

If you owe any money to your bank whatsoever, then switch to a neutral bank that you don't owe any money to, they do have the ability to take money out of your bank account to pay down the loan/LOC you owe them...

[SMinGA]

Better safe than sorry. Your atty is probably right in that you should not have any issues. But banks often do things that they should not, and ultimately must reverse. But going without access to your funds during that process is NOT fun.

[NoTomatoCan]

Ditto

If you owe any money to your bank whatsoever, then switch to a neutral bank that you don't owe any money to, they do have the ability to take money out of your bank account to pay down the loan/LOC you owe them...

The bank only has the ability to take money out of your bank account to pay down your loan/LOC IF you gave them permission. This is not something that is automatic by default just because you have a loan/CC and checking/savings account at the same bank.

However, the "permission" they need is typically in some fine print as part of your original loan documents.

Most folks move bank accounts because they know this is a possibility or they are unsure.

I agree with the first two replies though... If you are at all unsure, don't risk it.

[researchnerd]

I wondered about this too. My Wells Fargo CC is now IIB -- and last year, WF bought out Wachovia, where I have my bank accounts. Since Wachovia was not part of WF when I got the CC or opened my bank accounts, is there any possible way I could have agreed to allow WF to access my Wachovia stuff? And wouldn't the BK proceedings bar them from doing so?

[NoTomatoCan]

And wouldn't the BK proceedings bar them from doing so?

Yes, the automatic stay would prevent this.

While some folks might have experienced some shenanigans shortly before or shroly after filing, your sig line says you are pretty far into the process. At this point you probably have nothing to worry about.

Your question sort of illustrates why this is such a concern. Most of us can't even begin to locate the various CC agreements, bank account, or other loan documents that we signed however many years ago! With banks and CC companies changing hands so frequently, some document we signed 5 years ago (when very few of us were thinking BK) can come back to bite us!

For those folks who are just starting to miss payments and really aren't sure if their bank (or credit union) has the right to do this, the best bet is to do as others suggested and cut ties and move to a neutral bank.

[researchnerd]

Thanks for your quick response! One less thing for me to worry about...makes it easier to focus on fixing my Trustee's 15 (!!) objections.

You make a very good point -- I have no idea where any of those agreements are, or if I even still have them. I suspect the banks count on that when they sign you up or change the terms, but that could just be me being cynical. Honestly I'm so disgusted at this point that I hope to never have another credit card again.

[LadyInTheRed]

I wondered about this too. My Wells Fargo CC is now IIB -- and last year, WF bought out Wachovia, where I have my bank accounts. Since Wachovia was not part of WF when I got the CC or opened my bank accounts, is there any possible way I could have agreed to allow WF to access my Wachovia stuff? And wouldn't the BK proceedings bar them from doing so?

Wachovia and Wells Fargo are both federally chartered banks.

federal law won’t allow a bank to offset your deposit account to pay off your consumer credit card account.

http://www.helpwithmybank.gov/faqs/banking_offset.html

That may not apply to the OP's line of credit.

[Lisa68]

Thanks for all the responses.

We have been thinking about switching to a local bank anyway, so we are researching them now.

Lisa